Monday, November 22, 2010

Planning For A Strategic Default Series : Developing An Action Plan

We recently received a comment from a reader of our new book Strategic Default: How To Create A Brighter Financial Future For You, Your Family Or Your Business. The reader had asked why we did not address strategic default from a state by state perspective. The reader acknowledged that the book lays a strong foundation in preparation for a strategic default. Perhaps the reader did not understand that each person's situation and perspective is unique. On top of that each state has its own rules and laws which are changing. That said, our reader's question did open our eyes. We now understand that it will help the readers of this blog if we provide concrete steps to successfully execute a strategic default.  

The following is summary of Chapter 8 of Strategic Default: How To Create A Brighter Financial Future For You, Your Family Or Your Business. The title of Chapter 8 is The Process. The chapter provides a step-by-step guide of what is necessary to initiate and survive a strategic default. Here is the summary from the chapter:

Tuesday, November 16, 2010

Credit Reporting Companies Seek To Fight Back Against Strategic Defaults With Lower Scores!!

Credit reporting agencies are taking serious notice of strategic defaults. The main credit reporting agencies, Equifax, Experian, and Trans Union, have seen a sharp and significant increase in default rates among prime borrowers. The main credit scoring companies, Fair Isaac creator of FICO and VantageScore Solutions creator of the Vantage Score are seeking to account for the change in consumers payment behavior during this current economic crises.

Below is an excerpt from an article published by The Real Deal as it relates to this new attitude by credit reporting company's:

"[i]n late October, both Fair Isaac, the developer of the FICO score that dominates the mortgage field, and VantageScore Solutions, a joint venture by the three national credit bureaus and marketer of the competing VantageScore, outlined modifications they are making to handle the vast credit disruptions caused by the housing bust, the recession, high unemployment and behavioral changes by consumers. Not only are borrowers who previously were rated outstanding credit risks far more likely to default today...but many homeowners are defying long-standing credit industry assumptions by going delinquent on their first mortgage payments while simultaneously continuing to pay their credit card balances and second mortgages on time. Strategic defaults -- walkaways -- by high-score borrowers also have been an unexpected and shocking development."

"To adjust its statistical models to these new realities...VantageScore 2.0...expected to be rolled out nationwide to lenders in January, focuses in on the subtle warning signs of credit stress that might have been missed earlier -- and penalizes or rewards consumers with higher or lower risk scores than they would have received before. New FICO 8 Mortgage Score is based on similarly exhaustive research into consumer credit behavior changes...[w]hen used by a lender to rate the risk of new applicants or existing mortgage customers. The Mortgage Score is likely to be anywhere from 15 percent to 25 percent more accurate in detecting signs of future default compared with the standard FICO model."

So what does this all mean?

Monday, November 1, 2010

Strategic Default TV : The Daily Show Exposes Mortgage Bankers Association Hypocrisy For Strategically Defaulting!!! - StrategicDefault.TV

In a January 7, 2010 New York Times Article John Courson, the president and CEO of the Mortgage Bankers Association made very critical statements about people walking away from their homes or in other words strategically default. To quote from the article, John Courson:

"told The Wall Street Journal that homeowners who default on their mortgages should think about the 'message' they will send to 'their family and their kids and their friends.' Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay."

It seems that the Mortgage Bankers Association has had trouble following its own "moral directives". And WOW!!! You have to respect Jon Stewart's team from The Daily Show for completely exposing the hypocrisy of the Mortgage Bankers Association in the following video clip:

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Mortgage Bankers Association Strategic Default
Daily Show Full EpisodesPolitical HumorRally to Restore Sanity